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Early in her career, Falco made guest appearances on television shows like Law & Order and Homicide: Life on the Street. Tom Fontana, executive director of Homicide, cast Falco as Eva Thormann, the wife of an injured police officer, after watching Falco's performance in Laws of Gravity, a 1992 film directed by Nick Gomez. Fontana said of her, "She's an actress who's unadorned by any embroidery. She does everything with such simplicity and honesty, it's breathtaking."[5] A struggling actress at the time, Falco said her salary from these television episodes paid for one month's worth of rent.[6] Fontana cast Falco as a regular character, prison officer Diane Wittlesey, in his HBO series Oz based on her work in the Homicide episodes "Son of a Gun" and "A Shot in the Dark".[7]

Her friendship with former SUNY Purchase classmate Eric Mendelsohn, who was the assistant to Allen's costume designer, Jeffrey Kurland, helped her to be cast in the role. Mendelsohn would go on to direct Falco in his feature film Judy Berlin, for which he won "Best Director" honors at the Sundance Film Festival.

During the 2004 U.S. presidential election, Falco appeared in a 30-second television commercial on behalf of M.O.B. (Mothers Opposing Bush) in which she said "Mothers always put their children first. Mr. Bush, can you say the same?" referring to George W. Bush who was running for re-election.[13]

Falco has said she had problems with alcohol and decided to become sober after "one particular night of debauchery." She said in an interview that it is hard to be around the hard-partying cast of The Sopranos; "This cast (of the Sopranos) in particular, they really love to hang out and party. They make it look like fun. And it was fun for me! They spend a lot more time without me than with me, by my own choice—I’m always invited, and I’m always there for two minutes and I leave, because I can’t live in that world anymore. It's too dangerous."[16]

In 2003, Falco was diagnosed with breast cancer, which she subsequently survived. She chose not to make the news public for approximately one year.[16]